Statistics showing insolvencies in the second
quarter 2005 are published today (5 August) by the Department of
Trade and Industry.

COMPANY LIQUIDATIONS

There were 3,342 liquidations in England and Wales in the
second quarter of 2005 on a seasonally adjusted basis. This was
an increase of 12.5% on the previous quarter and an increase of
6% on the same period a year ago.

This was made up of 1,286 compulsory liquidations, an increase
of 14.6% on the previous quarter and an increase of 11.6% on the
corresponding quarter of last year, and 2,056 creditors
voluntary liquidations, an increase of 11.2% on the previous
quarter and an increase of 2.8% on the corresponding quarter of
last year.

0.7% of active companies went into liquidation in the twelve
months ended Q2 2005, the same as the previous quarter and a
decrease on the corresponding quarter of 2004.

INDIVIDUAL INSOLVENCIES

There were 15,394 individual insolvencies in England and Wales
in the second quarter of 2005 on a seasonally adjusted basis.
This was an increase of 11.7% on the previous quarter and an
increase of 36.8% on the same period a year ago.

This was made up of 11,195 bankruptcies, an increase of 7.8%
on the previous quarter and 27.5% on the corresponding quarter
of last year, and 4,199 Individual Voluntary Arrangements (IVA’s),
an increase of 23.7% on the previous quarter and an increase
of 69.6% on the corresponding quarter of the previous year.

1. The Official Insolvency Statistics are the most comprehensive
record of the number of insolvencies and bankruptcies and provide a
more accurate picture for analysing business conditions. The figures
include businesses and individuals, with a breakdown by type of
insolvency procedure. The figures treat Scotland separately (as
insolvencies are defined differently in Scotland) and give an
industrial analysis (for which the figures for England & Wales are
published one quarter in arrears).

2. The statistics are derived from administrative records of the DTI
Insolvency Service and Companies House Executive Agencies. The
figures for company liquidations are made up of compulsory
liquidations (winding-up orders made by the courts) and creditors'
voluntary liquidations registered at Companies House. Figures for
individual insolvencies comprise bankruptcy orders and individual
voluntary arrangements under the Insolvency Act 1986 and deeds of
arrangement under the Deeds of Arrangement Act 1914. Individual
voluntary arrangements and deeds of arrangement are now included
under one column.

3. Numbers of insolvencies are not directly comparable with numbers
of new business formations. Statistics of business start-ups and
closures that are directly comparable with each other have been
assembled from VAT records and are published by the Department of
Trade and Industry. The latest figures are those for 2003, and were
issued in a DTI press notice on 3 November 2004. More detailed
figures are available via the on-line database NOMIS. Additionally,
analysis into the number of firms in the United Kingdom estimated
the total number of businesses at the start of 2003 at 4 million.

4. The X11ARIMA program (developed by Statistics Canada) is used for
the seasonal adjustment of the insolvency statistics, this being the
recommended program within UK National Statistics.

5. A company or individual with debts that they are unable to pay as
they fall due is said to be insolvent.

6. Insolvent companies are dealt with under the Insolvency Act of
1986. They can either be the subject of a compulsory
liquidation (winding-up) order obtained from the Court by a
creditor, member or director or themselves pass a resolution,
subject to the approval of a creditors' meeting that the company be
wound up voluntarily (creditors voluntary liquidations). In
either case they are said to have been wound-up, and numbers
are given in Tables 1 and 6. A third type of winding-up, members'
voluntary liquidation, is not included because it does not involve
insolvency.

7. The Insolvency Act 1986 also introduced the procedures of
company administration orders and company voluntary
arrangements. The administration procedure gives a period of
time during which creditors are restrained from taking action and a
court appointed administrator puts forward proposals to deal with
the company’s financial difficulties. The Company Voluntary
Arrangement procedure aids business by enabling a company in
financial difficulty to come to a binding agreement with its
creditors. These are listed separately in Table 3.

8. The Enterprise Act 2002 introduced revisions to the corporate
administration procedures, replacing Part II of the Insolvency Act
1986 with Schedule B1. These include the introduction of additional
entry routes into administration that do not require the making of
an administration order and a streamlined process for
Administrations whereby a company can in some circumstances be
dissolved without recourse to liquidation. The primary objective of
administration (and of Company Voluntary Arrangements) is the rescue
of the company as a going concern; where liquidation does result
these cases will be recorded under the insolvency figures at Table
1. These provisions came into force on 15th September 2003 and
Administrations under the Enterprise Act have been included on
Table 3 from Q3 2003 (dissolution follows 3 months after a notice is
filed with the Registrar of Companies, if no objections are raised
by the court).

9. Receivership appointments comprise administrative
receivers appointed under the 1986 Act and certain other
receivership appointments, for example under the Law of Property Act
1925. Due to the use of the same statutory documentation for
different types of receivership, it is not possible to give a
breakdown between them. The provisions of the Enterprise Act 2002
(section 250) have made some changes to the procedures for
administrative receivership from 15 September 2003.

10. For individuals the term bankrupt is used to indicate
insolvency.

11. Insolvent individuals in England and Wales are dealt with mainly
under the Insolvency Act 1986. A bankruptcy order is made on
the petition of the debtor or one of his creditors when the Court is
satisfied that there is no prospect of the debt being paid. (Figures
for bankruptcy orders include administration orders, which
are bankruptcy orders relating to the estate of a deceased debtor).
On 1 April 2004 there was an increase in the amount of the petition
deposit required before a bankruptcy order can be made. There was a
significant rise in the number of bankruptcy orders made in the last
two weeks before the increase in petition deposits became effective.
There are also individual voluntary arrangements and deeds
of arrangement, which enable debtors to come to an agreement
with their creditors. Table 2 summarises all of the above types of
individual insolvencies.

12. Insolvent individuals in Scotland are subject to
sequestration under the Bankruptcy (Scotland) Act 1985. (There
are no deeds of arrangement or individual voluntary arrangements in
Scotland). The Bankruptcy (Scotland) Act 1993 amending the 1985 Act
came into force on 1 April 1993 and will have affected the number of
sequestrations in the Scottish Courts.

13. Under the Insolvency Act 1986 and the Insolvent Partnerships
Order, insolvent partnerships may be wound up like an unregistered
company or administered following bankruptcy orders against the
partners. Insolvent Partnerships can also enter administration or a
voluntary arrangement.

National Statistics

National Statistics are produced to high professional standards set out in the National Statistics Code of Practice. They undergo regular quality assurance reviews to ensure that they meet customer needs. They are produced free from any political interference.